A Function of Security: We all accept and believe that economic growth could not be achieved if we do not have adequate investment in the country. Investment is first of all a function of security: that feeling of comfort that you will receive reasonable return on your investment and that your principal is safe and secure. This is an area that President Khatami’s administration and other authorities have realized that if we want to have investment in the country we have to provide that safety and security for potential investors.
The other point is that if we look at risk-adjusted investment, there is no question about it that investment in Iran, for instance, is certainly riskier than investment in a European country. But if the expected return in Iran constituted improved guarantees and certain undertakings on the part of the government, particularly in protection of foreign investors, that risk-adjusted return on investment would probably be among the highest anywhere in the world. In other words, if you adjust that return for the risk associated with the investment in Iran you should have quite a reasonable return on the investment.

Private Banks: I’d like to see all the foreign banks to be authorized to set up branches here. The reason for that is basically competition, competition, and competition. The only way we can have better utilization of capital and the only way we can have better resource allocation in the country is through competition. If foreign banks were to come to this country, ultimately the beneficiary would be the consumer.
For many years we have been isolated and our banking system is way behind what is happening in the world. There are two main reasons behind this: First, the consumer is not in a position to receive the kind of service that a foreign depositor, a foreign customer of a bank, receives. Our consumers have therefore lost. That’s one problem. The other more important problem is resource allocation or capital allocation in the country, because state ownership of the banking system has not been properly implemented in the country. So we have wasted our capital. We have not allocated the scarce capital that we have to projects that would provide optimum or maximum return to the country in the long term. By opening up the economy to foreign banks I think both problems would be resolved over time. But this cannot be done overnight. In time we should have joint ventures between Iranian banks and foreign banks, and ultimately, we will some day see totally foreign-owned banks setting up branches and operating in Iran. This has happened all over the world, and I believe it will also happen in Iran.
We are in a pioneering stage of state ownership moving to privately-owned banks which are 100% domestically-owned. The CBI has officially announced that they are in a position to receive applications for private banks.
Ultimately, when as a result of these developments the economy becomes more receptive to domestic investment, it would obviously be receptive to foreign investment, too. That is only possible through the private sector. It is not something that we are discussing here, it is the experience of the world.

Land of Advantages: Iran is very strategically located. Today there is no question in my mind that the only way to open up at least the Central Asian republics to the free world is through Iran. Other countries cannot do it. Iran, being so strategically located, is the right place. We are in the center of about 400 to 500 million population. We have a young population who can be properly trained. Those who come in faster now will be in a better position to establish themselves for the long term. In 10 years Iran will be right at the center of the economic boom in the region.